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Podcast – Cleaning Up Live: Ion Yadigaroglu “Pioneering Impact Investor”

Ion Yadigaroglu has been Managing Partner at Capricorn Investment Group since 2004, and is an early investor in iconic technology companies including Tesla, SpaceX, Planet, QuantumScape and Saildrone. Capricorn was born from the desire to demonstrate the huge investment potential that resides in breakthrough commercial solutions to the world’s most pressing problems, and as such is one of the original impact investors.

Prior to Capricorn, Ion was Director of Business Development (M&A) with Koch Industries, executing a range of acquisitions and investments, and a Founder and Chief Executive Officer at Bivio, a software startup in Colorado, and an Analyst at Olsen & Associates, a quantitative forex trader.

Ion was a research fellow at Columbia University and holds a master’s in physics from ETH Zürich in Switzerland and a Ph.D. in Astrophysics from Stanford University. Ion serves on the boards of Twelve and Capricorn, and was a founding member in 2007 of GIIN, the Global Impact Investor Network, and is a Director of non-profits Ceres and MethaneSat.


Edited Highlights of Transcript:

ML Everyone will be excited to learn more about Capricorn and your portfolio companies. Could you give us a thumbnail of the organisation and how it started?

 IY Jeff Skoll, a former roommate of mine at Stanford, came to me in the early 2000s with a plan to spend the many billions he had made at eBay philanthropically over the coming decades. That provided an opening to create a new investment company, and we shook hands on the idea that we would somehow beat Wall Street at its own by driving great returns, but we’d also have a great impact. With six billion of capital, and a blank sheet of paper, I was drawn towards a strategy that would leverage innovation to achieve that great return with great impact, and to hopefully change how people invest. Climate change has been the vast majority of the impact that we’ve sought but we are excited to create solutions that can go after other big problems also.

 ML How does your investment in SpaceX fit within that strategy? It’s burning an enormous amount of hydrocarbons…

 IY You’re right that the impact is not as obvious as with an electric car, or a new solar cell.

But I feel that it has an incredible impact through what it’s enabled. Democratising access to space is what’s enabling this explosion of new companies and hardware that is doing things like Earth observation; Planet Labs looks at every tree in the world, every river in the world, every day. These tools are becoming incredibly important for climate and many other issues. So, I think of it as an enabling impact. If you ask me what its greatest impact is, however, it’s that you can go anywhere in the world, at any level of wealth or education, and if a kid is interested in science and engineering, it’s usually because of SpaceX. That impact is probably what I care about the most.

 ML Let’s come to your investment in Redwood Materials and battery recycling. Could that be something that actually helps turn the supertanker of energy?

IY You can’t continue to drive this massively important and successful success story of EVs and batteries without closing the materials loop, by recycling EVs back into new EVs. If you keep drawing material from nature, from a mountain somewhere, you just hit a floor in what you can do. You just can’t do it cheaper and with less footprint. Whereas if you’re taking those materials from a used battery pack, a used EV, there is really no floor to how well you can do. You can keep driving that cost and performance equation to ever greater competitiveness compared to the old fossil modes. With Redwood, JB Straubel saw an opportunity to build the mirror image of the of the EV battery industry, which is feeding it with raw materials from the recycling aspect.

 ML Another of your high-profile portfolio companies is QuantumScape, what do they do?

IY QuantumScape is one of the contenders on the next generation lithium ion batteries loosely called lithium metal, or alternatively solid-state. QuantumScape seems to have cracked the ability to make an incredibly high-performance, solid-state lithium battery that lasts more than a couple of charges, and they plan to build the first high-volume factories to make them. The potential for that is enormous because batteries are at the core of everything: electrification and transportation; taming the grid with solar and wind; all of our mobile electronics; and everything else. So, significant improvements in battery are just magic for everything. Because you don’t have to make the left side of the battery, you might approach half the costs and half the weight for the same amount of energy if QuantumScape can deliver what it’s aiming for.

ML Another of your portfolio companies is Joby, can you tell us what Joby does?

 IY Having invested in Tesla, we were of course drawn to every other mode of transport. Joby have designed a fixed wing, electric aircraft that can take off and land like a helicopter. It’s not a helicopter and it’s not an airplane, it’s a new thing. And, of course, there are no emissions, and the costs are surprisingly competitive, comparable to the cost of driving an electric car over the same distance. Joby wants this to be a real mode of transportation, possibly almost like primarily public transportation. It’s certainly the largest, best funded company in the world working on electrifying aircraft. In fact, sometimes people will say, how come you guys have achieved this kind of magic in these different areas over so many years? And one of the answers is: we just spend the money. You can’t do these incredibly hard things without getting the hundreds of engineers and other people together and funding it for a sustained way over many, many years.

 ML There’s another of your portfolio companies in the energy space, completely on the other end of the technology spectrum, called Erthos. Erthos is putting solar panels on the ground – is there much new technology involved?

 IY I’m a big lover of new technology, but I’m equally driven by doing things that can scale fast enough that they actually make a difference. So, I’m no less excited about Erthos. It follows the very bold realisation that we should no longer be installing solar modules on metal frames and tracking systems, we should instead lay them directly onto the ground. It may ultimately be the highest impact thing we’ve done in a very, very long time, because solar is already our big hope for climate change, for power generation. It’s growing faster than wind and faster than anything else. We think Erthos can drive between 10% to 20% improvement in the cost of producing solar energy from a solar plant and can do that without Gigafactories.

 ML Let’s come on to then the Helion Energy, your fusion investment. I think we all know why fusion would be attractive, but why Helion?

 IY The fact that so much venture capital is going to fusion is pretty amazing in its own right. But the giant science experiments, like the ITER and Cadarache, they’re not realistic approaches to making energy. What I think people missed is that there were some approaches that seemed crazy 30 years ago that have crept up on us as being not so crazy anymore because of the compounding of technology and other sectors. Helion doesn’t try to do any new physics, it’s a pretty brute force approach to fusion using power electronics. What Helion is doing is just trying to keep a transient going for milliseconds, rather than hours at a time.

ML When might Helion produce a commercial design? Is it conceivable we’ll have 1% of global electricity from fusion in 30 years? Before then?

IY Before: we underestimate long term compounding and we overestimate our ability to do things short-term. It is going to take a lot of engineering design work, beyond just proving that the core machine can sustain, in theory, a fusion burn. But what we liked and thought was more compatible with venture capital at Helion is that it is almost entirely a pure electromagnetic machine, meaning the super-heavy engineering side goes away, and you also don’t need scale.